169. Message From the President’s Assistant for National Security Affairs (Brzezinski) to West German Chancellor Schmidt1

WH81325. Dear Mr. Chancellor, You may remember that when in Bonn I mentioned the President’s hope that you would be able to encourage the French and British to adopt more forthcoming positions in MTN, in fulfillment of their Summit commitments—even as the US and Germany strive to fulfill their Summit commitments.2 You asked for information about the items on which we were having most trouble with the French and British. Here is this information, which has been provided me by Bob Strauss. It is a candid statement and should be held closely.

I am sending this off immediately since I gather from your staff that it would be helpful for you to have this information before you meet with Prime Minister Callaghan.

Begin text

October 12, 1978

MTNUK and France

1. Agriculture. The most serious problems with respect to France arise in the field of agriculture:

—In order to conclude MTN negotiations, we must reach agreement on an effective discipline regarding the use of agricultural export subsidies. If we do not have agreed rules about the extent to which the use of subsidies is appropriate, there will be frequent sharp conflicts between the Community and the US in the future.

—Successful conclusion of negotiations also requires improved market access for a number of US agricultural export items including such Mediterranean products as citrus and tobacco. France is reluctant to see the Community give concessions in this area, even though the products are not competitive with French products.

[Page 521]

2. Industrial negotiations. Both the United Kingdom and France are resisting liberalization of industrial trade:

—Both countries are wary of adopting even nonbinding guidelines which might inhibit direct subsidies for domestic industries.

—The British seek to dilute the government procurement rules by limiting the amount of transparency in their procurement process, thus frustrating the opening of their market to foreign goods. They also want to limit the coverage of any government procurement code.

—The British are also strongly opposed to lower tariffs on plastics, fertilizers and electrical machinery.

3. General. Both the French and British want to weaken the dispute settlement mechanism in the proposed codes so that the enforcement of the rules becomes more difficult, seeking a free hand to take unilateral and selective action without adequate international controls.

4. US concessions. The British and French have sought some things from us in these talks. They seek the removal of American Selling Price on chemicals, repeal of our restrictions on imported scotch and cognac, application of an injury test before we would impose countervailing duties on their subsidized goods, and some improvement in the safeguards rules. We can only be responsive to these requests in the context of a major settlement.

5. Timing. We need to complete the negotiations by December 15 if an MTN agreement is to be ratified by the US Congress in 1979. Failing such an MTN agreement, there will be a revival of protectionism, in the US as elsewhere, that will do great economic and political damage.

End text.

  1. Source: Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Country Chron File, Box 13, Germany F R: 7–10/78. Confidential; Via Annex Charlie Channels. Sent with the instruction to deliver at opening of business.
  2. During their October 3 meeting in Bonn, Schmidt promised Brzezinski that he would “be helpful in seeking French and British cooperation but stated he needs more detail and that Strauss tends to ‘cry wolf’ too often.” (Memorandum of conversation, October 4; Carter Library, National Security Affairs, Staff Material, Office, Outside the System File, Box 51, Chron: 10/1–7/78)